Transportation Law Hub

When a Michigan driver on Medicare skips No-Fault Personal Injury Protection (PIP) coverage (No-Fault) and later sues over a car accident, how much exposure does the at-fault driver actually face?

The Michigan Supreme Court addressed this question on July 27 in Canty v Mason, and the answer cuts both ways for the defense: injured Medicare beneficiaries generally must try to use their Medicare coverage before recovering in tort, but the Michigan No-Fault Act’s rate caps do not limit what they can recover once in court.

For the defense, mitigation is a real, usable defense here but don’t count on the No-Fault Act’s reimbursement caps to limit damages.

A Little Context

Before 2019, Michigan drivers carried unlimited No-Fault coverage, and lawsuits against at-fault drivers for medical bills were rare. The 2019 reforms let drivers, including Medicare beneficiaries, opt out of PIP coverage to save on premiums, and, in exchange, gave them the right to sue at-fault drivers directly for what the law calls “allowable expenses,” which in plain terms are the reasonable, necessary cost of medical care and rehabilitation under MCL 500.3135(3)(c). The reforms also capped what medical providers can charge No-Fault insurers, tied to Medicare’s fee schedules, in MCL 500.3157.

Joseph Canty was injured in a February 2021 crash that he blamed on Michael Mason. Canty had opted out of PIP coverage because he qualified for Medicare, and he sued Mason directly for his medical expenses rather than filing a PIP claim.

Mason, the defendant, argued that Canty should have used Medicare rather than billing the full, unreduced charges as tort damages and that any recovery should be capped under MCL 500.3157. The trial court rejected both arguments. However, the Michigan Court of Appeals reversed, siding with the defense on both issues.

Canty appealed to the Michigan Supreme Court, which split the outcome into two issues – one favorable to the defense and one not.

A Win for the Defense: Duty to Mitigate Applies

Michigan has long recognized a “duty to mitigate damages,” which is a common-sense rule requiring an injured person to take reasonable steps to keep their losses from growing larger than necessary. The Supreme Court held this rule still applies to these Medicare-related lawsuits, rejecting Canty’s argument that the statute’s “without limit” language let him recover every dollar billed with no restrictions. Bills still must be reasonable and necessary to count as recoverable “allowable expenses,” and using Medicare when it would cover the treatment is a reasonable, expected way to keep costs down. This gives the defense a genuine, usable tool, although the defense bears the burden of proving the plaintiff failed to make reasonable efforts, and a jury ultimately decides reasonableness.

Not a Win: No-Fault Act's Rate Caps Don't Apply

Separately, Michigan’s No-Fault law caps what medical providers can charge No-Fault insurers (MCL 500.3157), tied to Medicare rates. The Supreme Court held that these caps do not extend to limit a tort lawsuit like Canty’s. In effect, the Supreme Court read the law as creating two separate tracks: one with rate caps for claims against a No-Fault insurer and one without those caps for lawsuits against the at-fault driver. For the defense, this means MCL 500.3157 cannot be used to cap damages in these cases, even though the mitigation defense may achieve a similar practical effect in some cases.

Two justices wrote separately, and their positions are worth watching. Justice Welch, while agreeing with the result, questioned whether allowing plaintiffs who chose cheaper coverage (by skipping PIP) recover more than plaintiffs with full PIP protection really fits the 2019 reforms’ cost-control goals. He invited the Legislature to reconsider. Justice Zahra agreed the rate caps don’t apply but would have gone further, holding that Medicare’s own fee schedules directly cap what these plaintiffs can recover. The majority rejected that approach, treating Medicare’s fee schedule as relevant evidence rather than a hard legal cap.

The case was sent back to the trial court to apply these rulings to Canty’s specific bills.

For defense counsel and insurers handling Michigan auto accident claims, a few strategic takeaways stand out:

Keep pressing mitigation. When a plaintiff has Medicare and skipped PIP coverage, investigate early whether treatment was available through Medicare-participating providers and whether the plaintiff made reasonable efforts to use that coverage. Remember the defense carries the burden of proof on this issue, so build the record accordingly.

Don’t expect the No-Fault Act’s dollar caps to do the work for you. MCL 500.3157 will not limit these lawsuits, so exposure – especially for services Medicare doesn’t cover, like some attendant care or custodial services – can run well above what a comparable PIP claim would pay.

The plaintiff has room to argue back. The Supreme Court left open that a plaintiff can justify seeking treatment from non-Medicare providers in some circumstances, so mitigation is a fact-intensive defense, not an automatic cap.

Watch for further developments. Whether Medicare’s own fee schedules independently cap damages remains unresolved and may be litigated further, and the Legislature may revisit the statute given Justice Welch’s concerns about the 2019 reforms’ cost-control goals.

In short, Canty v Mason gives the defense a real mitigation argument to raise in Medicare-related auto accident cases, but it forecloses reliance on the No-Fault Act’s rate caps to limit tort damages – a distinction defense counsel and insurers should build into their evaluation and strategy of a case going forward.